The Xbox has come a long way since its launch in Japan. In 2001, it started from zero, squaring off against two established competitors with long histories in the console market. Now, less than three years later, it has won a place in the market: Sales are approaching 16 million units. However, the bulk of these sales have been in the US and Europe, and the Xbox has struggled to gain traction in Japan.

　　On the last day of E3, Microsoft Japan's Xbox Division general manager Yoshihiro Maruyama and director of marketing Mike Fischer met with GameSpot to talk about their activities in this strategic market. Coming from positions at Squaresoft and Sega, respectively, Maruyama and Fischer have the right backgrounds to lead Xbox's advance in the Japanese market, and the conversation touched on a wide range of topics, from trends at this year's show and developer relations to marketing efforts in Japan and the state of the industry there.

　　GameSpot: Starting off with some background information, can you comment on the top-selling games in Japan?

　　Mike Fischer: The best-selling game we've ever had is DOA3, and then DOA Beach Volleyball, and then Halo 2--I'm sorry, Halo 1 [laughs]. For now. I think it's fair to say that we're very grateful for the support of Itagaki-san and the Tecmo team.

　　GS: What comes after Halo?

　　MF: After Halo...Project Gotham Racing 1. And then most recently for us, one of the big games is Ninja Gaiden.

　　GS: Of course; that's going to be a big seller. Talking about sales, have you seen anything on the floor here at E3 that you think might affect your business in Japan in the next year?

　　MF: I do think it was interesting to see how big first-person games were--mostly first-person shooters, but there were a variety of games from a first-person point of view. I think that definitely shows Halo's influence, and I've seen those games in Japanese booths and in American booths. I think that if you look at the performance of a game like Medal of Honor in Japan, there's no disputing that Halo has opened the door to that genre. It's still not an enormous genre in the Japanese market, but I think it's a growing genre, and the fact of the matter is there's a lot of the Japanese market that is shrinking. So the fact that this genre is growing, and that it's a genre where we're very strong, is a really important thing for us.

　　I do think that we're starting to see a lot of Western developers improve their games. In the past, Japanese-developed games and US-developed games were very, very different, and I feel today that if you took a lot of the games out of the showrooms, it's a lot harder to tell which is Japanese and which is American. Now, because the games themselves are more sophisticated, the storyline and the characters are a bigger part of the experience, and that's where a lot of the cultural elements come into play. But in terms of the visuals and the technical skills and styles, it's remarkable to me--sure, if you see a game like AstroBoy, you can guess that's a Japanese game--but it's remarkable to me how the two have come together. I think that Japanese publishers are much more aware of global market needs, and I think that non-Japanese developers are learning more and more about how to make great console games.

　　GS: You mentioned that for many genres, the Japanese market is shrinking. What do you think the outlook is for the console market in the near future? Do you think it will turn around?

　　MF: We're counting on it. We're counting on being a major factor in that slump turning around. We're providing some very unique content, in part because our development environment gives developers a better chance to express their creative vision. Also, I think that the fact that we're the youngest platform has helped us to be innovative.

　　Yoshihiro Maruyama: You know, we've been hearing that the Japanese market has been shrinking, but we've also been hearing that the secondhand game market has been growing, and there haven't been any statistics covering that segment of the market. So yes, the new game market may be shrinking, but my guess is that overall, the gaming population hasn't been shrinking. As long as people are buying on the secondhand market, they're still gaming.

　　GS: That's a good point. How about the new handhelds from Nintendo and Sony? Will they have much impact on the console market?

　　MF: I don't think they'll have a big impact on the console business, because they're used differently--one is used out of home, and the other is used in-home.

　　GS: So are they competing with cell phone games?

　　YM: Yes, I think that's possible.

　　MF: Or, of course, competing with Game Boy.

　　Come back tomorrow for Maruyama's and Fischer's thoughts on developer support, online games, and game marketing in Japan.